Tower jumps on $1.3b silicon photonics contracts

The share price of Tower Semiconductor Ltd. (Nasdaq: TSEM; TASE:TSEM) has risen sharply to a new record after the company beat the analysts in its first quarter results and raised its guidance for the second quarter to reflect accelerated growth. The company also reported that it had signed contracts worth $1.3 billion with customers in the silicon photonics field, which will be a major engine of growth for Tower in 2027.

The Migdal Ha’Emek-based chipmaker reported first quarter revenue of $414 million, up 15% from the corresponding quarter of 2025 and above the analysts’ expectations of $411 million. Net profit for the first quarter of 2026 was $65 million, reflecting $0.57 earnings per share, up from $40 million in the first quarter of 2025, and $0.35 earnings per share.

Tower has issued revenue guidance of $455 million for the second quarter of 2026, which would represent 22% growth from the corresponding quarter of 2025 and 10% growth from the first quarter of 2026.

As of yesterday, Tower’s share price had risen 450% over the past year, closing on Nasdaq last night with a market cap of $26.276 billion. After publication of its financial results and new contracts, Tower’s share price opened up 15% on Wall Street, giving a market cap of $30.262 billion.

Tower also announced that it has signed contracts with revenue of $1.3 billion through 2027 with its largest silicon photonics customers and has already received advances of $290 million for capacity reservation. Customers have signed larger contracts with Tower (the amount of which was not disclosed) for 2028, and advances for these contracts will arrive by January 2027.

Tower adds that expanding manufacturing capacity to meet this demand is the basis for achieving Tower’s model, which includes sales of $2.8 billion and net income of $750 million in 2028.

Tower said, “Tower is enabling the explosive demand for AI, not only through aforementioned aggressive capacity expansion, but also through strategic investments in capabilities to enable next generation of Scale-out, Scale-across and Scale-up architectures for training and inference AI hardware.”

Tower CEO Russell Ellwanger said, “These long-term agreements further strengthen Tower’s strategic position at the center of the rapidly expanding optical connectivity market. These multi-year customer commitments underscore both the depth of our strategic partnerships and our customers’ strong confidence in Tower’s ability to execute on a differentiated, multi-generational silicon photonics technology roadmap addressing the accelerating performance demands driven by AI infrastructure growth.

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On the financial results, Ellwanger said, “We delivered a strong start to 2026, with broad-based year-over-year revenue growth across our key technology platforms and continued execution with strong advancement of our strategic priorities. Our second quarter guidance positions us with the highest quarterly revenue in Tower’s history, with expected sequential quarter-over-quarter growth throughout the remainder of the year. This demonstrates strong customer demand, expanding content opportunities and the increasing contribution of our leading and differentiated technology portfolio, particularly in silicon photonics for AI infrastructure.”

He added: “At the same time, our recently announced restructuring transaction in Japan, toward full ownership of Fab 7, further advances our 300mm strategy, enhancing our ability to support long-term customer growth through a qualified, high-volume and profitable operational structure. Supported by growing customer commitments, including $1.3 billion of contracted silicon photonics revenue for 2027 from our largest SiPho customers, strong revenue visibility and continued focus on profitable growth, we are confident in our path toward achieving our financial model targets of $2.8 billion in annual revenue and $750 million in net profit in 2028.”

Published by Globes, Israel business news – en.globes.co.il – on May 13, 2026.

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